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In May, Volkswagen finance chief Arno Antlitz warned that Europes top carmaker had about two or three years to prepare for cut-throat competition from abroad, mainly China.
Last week, he cut that already-tight timetable by a year, sending shockwaves through the global auto sector by threatening to shut plants in the companys home market for the first time.
While many of Volkswagens challenges - from a weakening Chinese market to a slower than expected switch to electric vehicles, have plagued it for a while, two recent developments have made things worse for the German group, according to interviews with seven company sources, investors and analysts. First, concerns have grown that Asian rivals, including BYD, Chery and Leapmotor, could speed up plans to build production capacity in Europe if Brussels goes ahead with planned hefty import tariffs on China-made EVs.
Second, Volkswagen recently cut prices for VW brand cars to counter tougher competition, a move that according to works council boss Daniela Cavallo has cost the company hundreds of millions of euros in profits.
Not only were the discounts steeper than originally anticipated, but they convinced management that the high cost base in Germany is jeopardising Volkswagens ability to compete with more agile rivals, a company source said, without giving details of the price cuts.
